Correct. He was speaking of the sword not made by human hands.
For the word of God is quick and powerful, and sharper than any two-edged sword, piercing even to the dividing asunder of soul (psyche) and Spirit (pneumatos), and of the joints and marrow, and is a discerner of the thoughts and intents of the heart. (Hebrews 4:12).
Starting from v.25:
25 And behold, there was a man in Jerusalem whose name was Simeon, and this man was just and devout, waiting for the Consolation of Israel, and the Holy Spirit was upon him. 26 And it had been revealed to him by the Holy Spirit that he would not see death before he had seen the Lord’s Messiah. 27 So he came by the Spirit into the temple. And when the parents brought in the Child Jesus, to do for Him according to the custom of the law, 28 he took Him up in his arms and blessed God and said: 29 “Lord, now You are letting Your servant depart in peace, according to Your word; 30 For my eyes have seen Your salvation 31 which You have prepared before the face of all peoples, 32 A light to bring revelation to the Gentiles, and the glory of Your people Israel.”
33 And Joseph and His mother marveled at those things which were spoken of Him. 34 Then Simeon blessed them, and said to Mary His mother, “Behold, this Child is destined for the fall and rising of many in Israel, and for a sign which will be spoken against 35 (yes, a sword will pierce through your own soul also), that the thoughts of many hearts may be revealed.”
Jesus taught in one place,
11 The greatest among you shall be your servant. 12 For whoever exalts himself will be humbled, and whoever humbles himself will be exalted. 13 Woe to you, scribes and Pharisees, you hypocrites! You shut the kingdom of heaven in men’s faces. You yourselves do not enter, nor will you let in those who wish to enter." (Matthew 23:13).
This is the "many" whose hearts would be pierced by the sword made not by hands. It cuts through to reveal what is and is not of God; what is holy and what is sinful in the hearts and intentions of men. The Pharisees were hypocrites, and were being run through with that sword even as Jesus was speaking these words to them. This was the rise and fall of many. Those like the disciples who were receiving the sword of the Spirit and letting it do its work were being raised up as the true leaders of Israel now. The Pharisees were falling away to nothing. But Mary, too, would have the sword pierce her heart. She would have had Jesus be Messiah on earth and establish His kingdom then and not suffer the humiliating and painful death of crucifixion at the hands of the Romans. But this too revealed what was of the soul and what was of the Spirit. The earthly kingdom had not come yet, and as painful as it would be to watch her Son die, He would HAVE to die to pay the price for the sins of all mankind should they wish to accept Him as Savior and Lord.
The Sword of the Spirit is still revealing the thought and intents of many hearts today. It cuts through to reveal what their real intentions are, and exposes it to the Light. Those who embrace the pain of it entering walk away healed, having had the evils excised from their souls (their "psyches"). Those who run from the piercing only put off an operation that must take place if they would be purified. And those who speak against the One who wields this sword will suffer judgment, for He brings it not in vain and they will fall before Him, some never to get up again in this life or the next.